- Now that commission-based pay has been deregulated in Australia and the UK, those opposed to commission will need their ethical arguments to carry the day
- However, many ethical arguments against commission are flawed and not necessarily strong enough to defeat ethical arguments in favour of commission
- One powerful argument against commission – which has not previously been made – is that it could harm to fundraisers’ psychological wellbeing
- We propose 12 safeguards to protect fundraisers and other stakeholders if commission is to be paid; it should not be paid unless these safeguards are in place
- We also float the idea that professional institutes could issue permits for organisations to pay commission to fundraisers.
Remunerating fundraisers by a percentage of the money they bring in (‘commission’) is almost universally accepted to be unethical practice, and is banned by many codes of practice around the world.
Because of this, those in the profession who argue against commission can point to the fact that it is prohibited, but rarely need to mount an ethical defence of this prohibition. As we it says in Rogare’s new green paper: “Ethical arguments against commission have been the moral icing on the regulatory cake. But it is the regulation that has done the heavy lifting.”
But now the regulatory prohibition has been removed from the codes in Australia (in 2021) and the UK (2025) – meaning fundraisers in those countries can receive commission payments – are those ethical arguments against commission up to the job?
The new green (discussion) paper from the international fundraising think tank Rogare – Playing the percentages: Re-evaluating the ethics of paying fundraisers by commission – looks at 14 ethical arguments that are regularly deployed against paying commission. We find many of these are actually quite weak arguments.
- Those that warn of the harm that might result from paying commission are rarely supported by any evidence that this harm will actually come about.
- They often present cases of ‘special pleading’ – singling out commission as unethical, but not extending this ethical reasoning to comparable aspects of fundraising, such as bonus payments.
- And they’ll often present a ‘straw man’ argument – a weak position that is easily argued against, especially that commission is a binary option: it can be paid on all donations received, or no donations. So, if paid on all donations, that would be unfair because fundraisers would earn rewards on windfall gifts (such as an unexpected legacy), for which they had put in no effort. The conclusion is that this is unethical, and therefore commission should be prohibited in its entirety. However, this challenge can be circumvented simply by excluding windfall gifts from the eligibility for commission.
We suggest that many of the traditional ethical arguments against commission are not strong enough to defeat two ethical arguments in its favour. These are that commission-based pay:
- Could result in more money being raised for good causes
- Enables smaller organisations with little budget to engage in fundraising, and compete with larger organisations.
But there is one very strong argument against paying commission that previous opponents of this form of remuneration have not made, but we do in our paper. This is that if payment by commission became commonplace in the fundraising profession, it could harm fundraisers’ psychological wellbeing, as evidence from salespeople paid on commission in the commercial sector shows.
To protect fundraisers, and other stakeholders, we propose 12 safeguards that should be met before commission can be paid to fundraisers:
- Commission should never be part of the remuneration package for salaried fundraising staff working at a nonprofit. Instead it should only be paid to agency or freelance fundraisers contracted by/to a nonprofit organisation.
- Commission should never be the sole form of remuneration; instead, it should always only be part of a mix of types of remuneration.
- That a fundraiser is partly remunerated by commission should always be disclosed to donors. Consideration should be given to making this part of the relevant code of practice.
- Commission should only ever be due where there is a demonstrable audit trail between the ask and the gift.
- Commission should never be due on unsolicited gifts (e.g. windfall gifts).
- Commission payments should always be capped.
- All fundraising that is paid by commission should be time-limited; the duration of commission payments should not be open ended.
- Nonprofit organisations that intend to pay commission should decide which fundraising methods/income streams will attract commission payments, and those that will be ineligible for commission.
- The initial decision to pay commission to fundraisers should be approved by the trustee board.
- A risk assessment of potential harms should be completed.
- Nonprofit organisations that intend to pay commission to agency and/or freelance fundraisers should institute a written policy.
- Commission should only be paid if there are safeguards in place to protect fundraisers’ psychological wellbeing; and it should never be paid if those safeguards are not in place.
We also float the idea that professional institutes could put in place some kind of permitting scheme that would give permission to organisations to pay commission to fundraisers, contingent on these safeguards being in place. But we don’t go so far as to recommend this as it might be too bureaucratic and not necessary – it’s just an idea.
As we conclude in the Playing the percentages report:
“If charities cannot put these safeguards in place – especially to exercise their duty of care to protect the psychological wellbeing of their fundraisers – then they should not be using commission as part of their remuneration packages, irrespective of whether the relevant code of practice permits it.”
Heather Hill, one of the paper’s co-authors, says: “The sector needs to do better than saying ‘because the code says so’, when someone asks why commission-based pay is not permitted. ‘It’s unethical because the code says so’ is a response that fails to provide a rationale for the reason the code has taken such a position, and it fails to address situations for which there is no applicable code.
“This conversation is long overdue and we are pleased to offer this paper as a way of jumpstarting critical thinking around the issue.
“But we would like to make it clear that we are neither arguing for not against commission-based pay for fundraisers, only evaluating the ethical arguments for and against.”
The paper’s authors are:
- Ian MacQuillin (UK) – director of Rogare – The Fundraising Think Tank
- Ruth Hansen (USA) – associate professor at the University of Wisconsin-Whitewater’s College of Business and Economics
- Heather Hill (USA) – director of international philanthropy at Chapel & York
- Roewen Wishart (Australia) – high value and strategy director at Xponetial.
